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Ericsson Extends Credit Maturity

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Ericsson (ERIC - Analyst Report) recently procured a new credit facility with extended maturity to refinance its earlier credit facilities signed in 2007. This comprises a revolving credit facility with a borrowing capacity of $2 billion.

However, with this flexible financing tool, Ericsson will also be able to serve its objective of delaying the loan repayments, thereby extending the maturity. The new credit facility has tenure of five years, with two available extension options of one year each. An aggregate of 18 banks have provided the credit facility, with HSBC Holdings plc andNordea Bank acting as coordinators.

In first quarter 2013, Ericsson had a negative cash flow of SEK -3.00 billion ($0.47 billion) from operations, primarily resulting from increased working capital requirements for restructuring. Cash outlays for restructuring amounted to SEK 0.3 billion ($0.04 billion). Trade payables increased by SEK 3 million totaling to SEK 23 million as on Mar 31, 2013. With the new credit facility, Ericsson has increased its liquidity and management intends to use this credit for general corporate purposes.

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